What Happened to the Cash at SVB?

The video discusses the dynamics of bank failures, highlighting that most depositors are rescued. It explains how banks have increased cash reserves due to regulatory changes post-2008 crisis and government interventions during COVID-19. The video also examines loan-deposit ratios and how regulations affect bank liquidity. It contrasts typical bank investment strategies with those of Silvergate and Silicon Valley Bank, emphasizing the risks of investing heavily in bonds held to maturity.

What is one of the main reasons banks have more cash on their balance sheets now compared to before?

• Increased customer deposits

• Regulatory changes post-2008 crisis

• Decreased loan demands

• Higher interest rates

How have regulations affected larger banks' balance sheets?

• They have increased the amount of cash and liquidity

• They have decreased the number of depositors

• They have allowed more risky investments

• They have reduced the number of loans

What is a key factor that affects a bank's loan-to-deposit ratio?

• The number of branches a bank has

• The number of employees

• The amount of cash reserves

• The interest rates offered

What was a significant issue for Silicon Valley Bank according to the video?

• Too many branches

• Lack of government support

• Investing heavily in bonds held to maturity

• High number of customer withdrawals

What is considered the least flexible option for banks when managing spare money?

• Investing in stocks

• Holding cash reserves

• Investing in bonds held to maturity

• Offering more loans